NextGen FAA Contracts Are $4.2 Billion Over Budget, GAO Says

By Alan Levin -
Feb 16, 2012

More than one-third of the 30
contracts critical to building a new U.S. air-traffic system are
over budget and half are delayed, a government audit concluded.

Eleven of the 30 contracts underpinning the so-called
NextGen system exceed projected costs by a total of $4.2
billion, according to a Government Accountability Office report
released today. Fifteen of the contracts are behind schedule by
an average of four years, the GAO report said.

“These challenges, if they persist, will impede the
implementation of NextGen, especially in light of the
interdependencies among many acquisition programs, where cost
increases or delays in one program can affect the costs and
schedules of other programs,” the agency said in the report.

The U.S. Federal Aviation Administration is moving from a
radar-based system of tracking aircraft to one using global-
positioning satellites. The NextGen system should reduce
aircraft fuel consumption and emissions while improving safety,
according to the agency. It will cost the government, airlines
and other aircraft owners as much as $42 billion by 2025, the
agency estimates.

Most of the cost increases identified in the report
occurred before 2007, Brie Sachse, the FAA’s spokeswoman, said
in an e-mail. From 2007 through 2011, the agency held cost
increases on NextGen contracts to no more than 1.6 percent,
Sachse said.

Cost Estimation

“The FAA has adopted a majority of the GAO’s cost
estimation best practices, and looks forward to reviewing the
GAO’s recently released scheduling best practices,” Sachse
said.

In 2009, the GAO took the FAA off its “high-risk” list of
government agencies because it had improved management of large
contracts. Recent issues with agency contracts “have renewed
concerns about the agency’s ability to manage complex multi-
billion-dollar procurement programs,” the GAO said in the
report.

The Wide-Area Augmentation System, which makes the position
information from GPS accurate to within a few meters, is costing
the FAA $3 billion, three times higher than initial estimates,
the GAO said. It has also taken 14 years longer to complete than
the FAA planned, the auditing agency said.

Flight Information Systems

The Standard Terminal Automation Replacement System, the
computers that display flight information to controllers
handling aircraft near airports, was $1.8 billion more expensive
than projected, the GAO said. The system, which was built by
Raytheon, was completed in 2007, almost two years late.

The contract for Automated Dependent Surveillance-
Broadcast, a backbone of the NextGen system, is $44 million more
than the $1.7 billion cost estimate, a 3 percent increase, the
GAO said. It’s scheduled to be completed in 2014 and is on
track, according to the report.

ADS-B is a network of ground stations and computers that
will monitor radio transmissions from the thousands of planes in
the air, allowing controllers to know where the aircraft are
located. Under this new system, each aircraft will use GPS to
determine its own position and broadcast that once a second, a
more accurate way of tracking planes than radar. The lead
contractor is ITT Corp. (ITT)

An update to the computers that monitor high-altitude air
traffic, the En-route Automation Modernization program built by
Lockheed, is $330 million, or 15 percent, over budget, according
to the report. It is almost four years behind schedule.

Cost Overruns

Some of the cost overruns, including for the Standard
Terminal Automation Replacement System and the En-route
Automation Modernization program, have been reported previously
by the FAA, the GAO and in the press. The GAO surveyed the
status of the contracts at the request of Congress.

The FAA didn’t follow best practices for estimating costs
of ADS-B and three other programs that the GAO analyzed in
depth, according to the report.

Delays and cost increases occur for several reasons,
according to GAO. The FAA adds unanticipated requirements to
programs, controllers and other users of new systems are not
sufficiently involved in development, the complexity of software
development is underestimated, and unanticipated events such as
funding cuts occur, the GAO said.

While some of the programs are completed already or not
directly related to NextGen, delays also may slow NextGen
because air-traffic programs are so interconnected, according to
the report.